Imax earnings off 14%

Company blames drop on installation delays for projector systems

Shares in Imax plunged 14% in after-hours trading Wednesday as the bigscreen exhibitor reported a sharp drop in earnings and told investors it still hasn’t been able to find a buyer.

Company blamed the 38% drop in revenue to $20.7 million on delays that prevented it from installing any of its projection systems during the quarter.

It also noted the impact of disappointing box office for WB toon “The Ant Bully,” which was released in Imax 3-D, and legal expenses related to its search for a buyer.

“Ant Bully” made only $7.1 million in Imax box office, compared with $30.8 million for “Superman Returns” and $7.8 million for “Open Season” since its Sept. 29 debut.

Net loss was $12 million, down from a $2.3 million profit in the same quarter last year.

In the current quarter, Imax will install between five and eight systems. Six systems expected to be installed by the end of the year have been pushed back to 2007, when it expects to install between 24 and 32.

Imax had planned to release WB toon “Happy Feet” in 3-D this month, but pic ended up being finished too late for the conversion process. It will be released on Imax, but not on 3-D.

However, because non-3-D pics have a shorter run in Imax theaters, company is using the extra room on its schedule to release Fox family comedy “Night at the Museum” on its screens in December.

Next year, its releases include “Spider-Man 3″ and “Harry Potter and the Order of the Phoenix.”

Company said it has not been able to find a buyer and is still considering bids at a lower valuation than it sought earlier this year when it started working with investment banks Allen & Co. and UBS.

In a bid to streamline its distribution process and cut costs, Imax is starting work on a digital cinema system it hopes to roll out by the second half of 2008. Once Imax screens have gone digital, company could eliminate the hefty $30,000-per-print fee it currently charges studios and move to a lower “virtual print fee” like that charged for movies in 35mm that are released digitally.

It also would free up resources to convert more films for Imax screens.

“Instead of releasing six or seven films per year, we’ll hopefully be able to do nine or 10,” co-CEO Rich Gelfond said.

Imax shares closed up 2% at $4.84 Wednesday before earnings were announced.